Consolidation Movement Stressful For Farmers, Ag Lenders

It’s a trend that doesn’t show signs of slowing anytime soon.  The consolidation of farms and farming business will have a big impact on rural America in 2019 and beyond.  Jeff Plagge said he’s very concerned about the impact consolidation will have not only on farmers and the Ag economy, the Ag bankers and lenders.  He said its important especially for smaller banks and those serving rural customers that bankers are proactive when it comes to a succession plan.

“But what are you doing to connect to the succession plan on the farms, so if there’s somebody young coming into the business are you connecting now rather than waiting later on, when dad or mom retires.  And understanding that you’re going to be talking to an entirely different person in that operation then you’re talking to now without a lot of history.”

Plagge said the consolidation of farm operations is having a big impact on smaller banks.  He noted one of his chief concerns, is the fragmentation of the Ag lending industry.

“One of the beauties of Ag banking over the years has been people who have been looking at the operation as a whole.  Making sure whatever happens fits into the structure and the profitability of the operation. When you start having financing segmented nobody’s really looking at it as a whole.  They’re just looking at it trying to sell something to a producer that may or may not actually work in the operation.”

Plagge said as time marches on, small Ag banks will need to determine how they want to serve larger and larger clients, either by working with other small banks, or handing the business over to larger banks.  He added communication is important, not only from the bank to the producer, but from the producer to their local lender.

If you have a story idea for the Washington Ag Network, call (509) 547-1618, or e-mail gvaagen@cherrycreekradio.com